SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

        |X| Quarterly Report Under Section 13 or 15(d) of the Securities
                             Exchange Act of 1934.
                 For the quarterly period ended: March 31, 2002

                                       OR

       |_| Transition Report Under Section 13 or 15(d) of the Securities
                             Exchange Act of 1934.
                       For the transition period from:      to

                       Commission File Number: 000-030813

                                  AlphaRx, Inc.
                 (Name of Small Business Issuer in its Charter)

         Delaware                                      98-0177440
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)


                             10-75 East Beaver Creek
                             Ontario L4B 1B8, Canada
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (905) 762-0745

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, $.0005 par value
                                (Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes |X| No |_|

The number of outstanding shares of registrant's Common Stock on May 13, 2002
was 12,179,332.

Transitional Small Business Disclosure Format. Yes |_| No |X|


<PAGE>

                                  ALPHARx, INC.

                                   FORM 10-QSB

                                 March 31, 2002

                                TABLE OF CONTENT

DESCRIPTION                                                                 Page
                                                                            ----

Part I            Financial Information

Item 1            Financial Statements                                         3

                  Unaudited Balance Sheets as of March 31, 2002 and 2001       3

                  Unaudited Statements of Operations for the three
                  months ended March 31, 2002 and 2001                         5

                  Unaudited Statements of Operations for the six
                  months ended March 31, 2002 and 2001                         6

                  Unaudited Statements of Cash Flows for the six
                  months ended March 31, 2002 and 2001                         7

                  Notes to the Financial Statements                            8

Item II           Management's Discussion and Analysis of
                  Financial Condition and Results of Operations               11

Part II           Other Information                                           14

SIGNATURE PAGE                                                                15


2
<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                                  ALPHARx, INC.
                          (A Development Stage Company)

                                 BALANCE SHEETS
                          As of March 31, 2002 and 2001

                                   (Unaudited)

                                     ASSETS

                                                           March 31   March 31
                                                             2002       2001
CURRENT ASSETS

   Cash                                                    $  3,723
   Accounts Receivable                                       14,488
   Due from Officer                                           1,335
   Loan-Michael Lee                                           3,305
   Inventory                                                 47,856   $  2,905
                                                           --------   --------

     TOTAL CURRENT ASSETS                                    70,707      2,905

PROPERTY, PLANT & EQUIPMENT, at cost

         Less accumulated deprecation of $40,934(note 4)    124,223
         Less accumulated deprecation of $17,502                        65,592
                                                                      --------

OTHER ASSETS

   Deposit                                                              15,000
   Investment                                                46,408     46,408
                                                           --------   --------

TOTAL ASSETS                                               $241,338   $129,905
                                                           ========   ========

See accountant's review report
The accompanying notes are an integral part of this statement


3
<PAGE>

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                          As of March 31, 2002 and 2001

                                                 March 31       March 31
                                                   2002           2001
CURRENT LIABILITIES

   Accounts Payable and Accrued Liabilities    $    34,250    $    28,721
   Notes Payable-Current                           318,114
   Salary Payable                                  154,000
   Sales Tax Payable                                   787
   Accrued Interest                                 22,166          3,933
                                               -----------    -----------
        TOTAL CURRENT LIABILITIES                  529,317         32,654

LONG-TERM LIABILITIES

   Loan Payable                                                     4,000
   Loan from Shareholders                                         164,003
                                                              -----------
       TOTAL LONG-TERM LIABILITIES                                168,003

SHAREHOLDER'S EQUITY

Common Stock, common, $ 0.0005 par value,
   Authorized 100,000,000 shares, issued and
   outstanding 11,193,064 shares (note 5)      $     5,596
   Additional paid-in capital                    1,923,330
   Deficit                                      (2,216,905)
                                               -----------
Common Stock, common, $0.0001 par value,
   Authorized 100,000,000 shares, issued and
   outstanding 49,388,330 shares                              $     4,939
   Additional paid in capital                                   1,374,291
   Deficit                                                     (1,449,982)
                                                              -----------
TOTAL SHAREHOLDER'S EQUITY                        (287,979)       (70,752)
                                               -----------    -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY     $   241,338    $   129,905
                                               ===========    ===========

See accountant's review report
The accompanying notes are an integral part of this statement


4
<PAGE>

                                  ALPHARx, INC.

                          (A Development Stage Company)

                             STATEMENT OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 2002 and 2001
                                   (Unaudited)


                                                      March 31
                                                  2002        2001
                                                  ----        ----

SALES                                          $  13,840    $      0

COST OF SALES                                      9,932
                                               ---------
GROSS PROFIT                                       3,908

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     221,389      31,207
                                               ---------    --------

         LOSS FROM OPERATION                    (217,481)    (31,207)

OTHER INCOME
   Interest Income                             $       0    $      2
                                               ---------    --------
                                                       0           2

         LOSS BEFORE INCOME TAXES               (217,481)    (31,205)

INCOME TAX                                             0           0
                                               ---------    --------

NET LOSS                                       $(217,481)   $(31,205)
                                               =========    ========

See accountant's review report
The accompanying notes are an integral part of this statement


5
<PAGE>

                                  ALPHARX, INC.

                          (A Development Stage Company)

                            STATEMENTS OF OPERATIONS
                FOR THE SIX MONTHS ENDED MARCH 31, 2002 and 2001
                                   (Unaudited)

                                                       March 31
                                                 2002         2001
                                                 ----         ----

SALES                                          $  13,840    $       0

COST OF SALES                                      9,932
                                               ---------
GROSS PROFIT                                       3,908

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     428,720      163,341
                                               ---------    ---------

         LOSS FROM OPERATION                    (424,812)    (163,341)

OTHER INCOME

   Interest Income                                          $      12
                                                            ---------
                                                                   12

         LOSS BEFORE INCOME TAXES               (424,812)    (163,329)

INCOME TAX                                             0            0
                                               ---------    ---------
NET LOSS                                       $(424,812)   $(163,329)
                                               =========    =========

See accountant's review report
The accompanying notes are an integral part of this statement


6
<PAGE>

                                  ALPHARX, INC.

                          (A Development Stage Company)

                            STATEMENTS OF CASH FLOWS
          FOR THE SIX MONTHS ENDED MARCH 31, 2002 and 2001 (Unaudited)

<TABLE>
<CAPTION>
                                                                                        March 31
                                                                                    2002         2001
<S>                                                                              <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net Loss                                                                      $(424,812)   $(163,329)
   Depreciation Amount                                                              11,132        6,442

   Adjustments to reconcile note income to net cash
     Cash provided by operating activities:
             Changes in assets and liabilities:
           Increase in Accounts Receivable                                         (14,488)
           Increase (Decrease) in Accounts Payable                                   6,472         (118)
           Increase in Deposits                                                                 (15,000)
           Increase in Accrued Interest                                             11,831        3,933
           Increase in Loan Payable                                                               4,000
           Increase in Loan from Shareholders                                                   161,638
           Decrease in Salary Payable                                             (124,000)
           Increase in Sales Tax Payable                                               787
           Increase in Due from Officer                                             (1,335)
           Increase in Loan-Michael Lee                                             (3,305)
           Increase in Inventory                                                   (47,856)
           Increase in Notes Payable-Current                                        68,360
                                                                                 ---------    ---------
NET CASH PROVIDED/(USED) BY OPERATIONS ACTIVITIES                                $(517,214)   $  (2,434)

CASH FLOWS FROM INVESTING ACTIVITIES
           Increase of Improvements                                                              (1,837)
           Acquisition of Machinery & Equipment                                                  (6,768)
                                                                                 ---------    ---------
NET CASH PROVIDED/(USED) BY INVESTING ACTIVITIES                                 $       0       (8,605)

CASH FLOWS FROM FINANCING ACTIVITIES
           Proceeds from Issuance of Stock                                             645
           Increase in Additional Paid-In Capital                                  536,551
                                                                                 ---------    ---------
NET CASH PROVIDED/(USDED) BY FINANCING ACTIVITIES                                $ 537,196    $       0

NET INCREASE (DECREASE) IN CASH                                                     19,982      (11,039)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

CASH AS OF September 30, 2001 (2000)                                               (16,259)      13,944
                                                                                 ---------    ---------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                       $   3,723    $   2,905
                                                                                 =========    =========
</TABLE>


SUPPLEMENTARY DISCLOSURE:
The statement of cash flows using indirect method as defined under Statement of
Financial Accounting Standard of No. 95.


7
<PAGE>

                                  ALPHARx, INC.

                                   FORM 10-QSB

                                 MARCH 31, 2002

                          NOTES TO FINANCIAL STATEMENTS

                                   (Unaudited)

NOTE 1. INTERIM FINANCIAL INFORMATION

In the opinion of management, the accompanying unaudited financial statements
contain all necessary adjustments, which are of a normal recurring nature, to
present fairly the financial position of AlphaRx, Inc. as of March 31, 2002 and
2001, the results of operations for the six months ended March 31, 2002 and
2001, and the cash flows for the six months ended March 31, 2002 and 2001, in
conformity with generally accepted accounting principles. Operating results for
the six months period ended March 31, 2002 are not necessarily indicative of the
results that may be expected for the entire year ending September 30, 2002 or
future operating periods.

These unaudited interim financial statements should be read in conjunction with
the financial statements and related notes contained in AlphaRx's Form 10SB
registration statement.

NOTE 2. FORMATION AND ORGANIZATION OF BUSINESS

ALPHARX, INC. (the Company) was incorporated under the laws of the State of
Delaware on August 8, 1997. The company is still in its developing stage and had
no active business operation as of March 31, 2002.

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of ALPHARX, INC. is presented to
assist in understanding the Company's financial statements. The financial
statements and notes are representations of the Company's management who is
responsible for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles and have been consistently
applied in the preparation of the financial statements.

Cash and Cash Equivalent

For purpose of these statements, cash equivalent included cash on hand, cash in
bank, and all short-term debt securities purchased with a maturity of three
months or less.


8
<PAGE>

Depreciation

The company's property, plant, and equipment are depreciated using the Modified
Accelerated Cost Recovery System Method, with recovery period of 3 years to 10
years.

Property and Equipment

Property and equipment are stated at cost. Depreciation is calculated by using
Modified Accelerated Cost Recovery System Method for financial reporting as well
as income tax reporting purposes at rates based on the following estimated
useful lives:

                  Automobiles                        5 years
                  Machinery and Equipment            3 years
                  Furniture and Fixtures             7 years
                  Improvements                      10 years

The company capitalizes expenditures that materially increase assets' lives and
expense ordinary repairs and maintenance to operating as incurred. When assets
are sold or disposed or otherwise fully depreciated, the cost and related
accumulated deprecation are removed from the accounts and any gain or loss is
included in the statement of income and related earnings.

Income Taxes

The company is a C Corporation that subjects to accrual of federal tax according
to tax laws. There is no income tax for year ended since the company was under a
development stage and did not have active business operations. The State of
Delaware does not impose tax on corporation net income.

NOTE 4. PROPERTY, PLANT & EQUIPMENT

                                                     Life Year
Automobiles                           $  22,067          5
Machinery & Equipments                  129,597          3
Furniture & Fixtures                     11,656          7
Improvements                              1,837         10
                                       --------
     Less accumulated depreciation       40,934
                                       --------
                                       $124,223
                                       ========

NOTE 5. COMMON STOCK

The Company is authorized to issue 100,000,000 shares of common stock. As of
March 31, 2002, 11,193,064 shares of such common stock had been issued and
outstanding, each share bears a par value of $0.0005.


9
<PAGE>

On March 20, 2002 the Company's board of directors declared a one-for-five share
consolidation on the shares of the Company's common stock. Upon the
effectiveness of the share consolidation, five shares of common stock will be
converted and reclassified as one share of post-consolidation common stock, and
each existing stock certificate will represent one-fifth the number of shares
shown thereon. The Company's new common stock began trading on March 21, 2002.
The Company amended the current par value of $0.0001 per share to $0.0005 for
all shares of common stock. All references in the financial statements to the
number of shares outstanding, per share amounts, and stock option data of the
Company's common stock have been restated to reflect the effect of the share
consolidation for all periods presented.

NOTE 6. STOCK OPTION PLAN

The Company has a Stock Option Plan (Plan) under which officers, key employees,
certain independent contractors, and non-employee directors may be granted
options to purchase shares of the Company's authorized but unissued common
stock. The maximum number of shares of the Company's common stock available for
issuance under the Plan is 1,600,000 shares. As of March 31, 2002, the maximum
number of shares available for future grants under the Plan is 1,150,000 shares.
Under the Plan, the option exercise price and its fair market value are
determined to be $0.05. Options currently expire no later than 10 years from the
grant date and generally vest within five years. Proceeds received by the
Company from exercises of stock options are credited to common stock and
additional paid-in capital.

See accountant's review report


10
<PAGE>

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION

      The following discussion and analysis should be read in conjunction with
the Financial Statements, including the Notes thereto, appearing in this Form
10-QSB. Except for the historical information contained herein the foregoing
discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those projected
in the forward-looking statements discussed herein.

General

      We are a development stage drug delivery company specializing in the
development of innovative therapeutic products for the pharmaceutical and
consumer health care market. Our core competence is in the development of novel
drug formulations for therapeutic molecules or compounds that have exhibited
poor G.I. absorption due to poor solubility or have yet be administerable to the
human body with an acceptable delivery method. Our drug delivery system is
versatile and offers significant flexibility in the development of suitable
dosage formulations (i.e. oral, topical or parenteral) to meet the requirements
of specific drug molecules. Our primary activities since inception (August 7,
1997) have been, in addition to research and development, establishing our
offices and research facilities, recruiting personnel, filing patent
applications, developing a business strategy and raising capital.

      We began to test market several consumer health products to the Canadian
and US markets under the AlphaRx brand name in February 2002, via the company's
website at www.alpharxonline.com. Test marketing and additional clinical human
studies to substantiate expected marketing claims, including comparative
advertising claims, are expected to continue throughout 2002. Assuming the
successful completion of test marketing, a national roll-out of several
over-the-counter products are expected to occur in the fourth quarter of 2002,
at which time management anticipates the Company emerging from the development
stage.

      We intend to continue investing in the further development of our drug
delivery technologies and to actively seek collaborators and licensees to
accelerate the development and commercialization of products incorporating our
drug delivery systems. Depending upon a variety of factors, including
collaborative arrangements, available personnel and financial resources, we will
conduct or fund clinical trials on such products and will undertake the
associated regulatory activities.

RESULTS OF OPERATIONS

      The first six months of fiscal year 2002 ending March 31, 2002 resulted in
a net loss $424,812 from operations as compared to $163,329 for the
corresponding fiscal 2001 period. The increase was primarily due to higher R&D
costs as a result of spending on pre-clinical and clinical development.


11
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

      Since inception, we have financed operations principally from the sale of
Common Stock and expect to continue this practice to fund our ongoing
activities.

      We incurred a net loss of approximately $424,812 for the six months ended
March 31, 2002, resulting in an accumulated deficit of approximately $2,216,905.
We expect to continue to incur operating losses and may require additional
financing to continue our operations thereafter.

      We currently do not have sufficient resources to complete the
commercialization of any of our proposed products or to carry out our business
strategy. Therefore, we will likely need to raise substantial additional capital
to fund our operations sometime in the future. We cannot be certain that any
financing will be available when needed. Any additional equity financings may be
dilutive to our existing shareholders, and debt financing, if available, may
involve restrictive covenants on our business.

      We expect to continue to spend capital on:

      1.    research and development programs;

      2.    preclinical studies and clinical trials;

      3.    regulatory processes; and

      4.    manufacture and market products using our drug delivery systems.

      The amount of capital we may need will depend on many factors, including:

      1.    the progress, timing and scope of our research and development
            programs;

      2.    the progress, timing and scope of our preclinical studies and
            clinical trials;

      3.    the time and cost necessary to obtain regulatory approvals;

      4.    the time and cost necessary to establish our own sales and marketing
            capabilities or to seek marketing partners to market our products
            for us;

      5.    the time and cost necessary to respond to technological and market
            developments; and

      6.    new collaborative, licensing and other commercial relationships that
            we may establish.

      The inability to raise capital would have a material adverse effect on the
Company. We currently have no capital commitments other than the payment of rent
on our facilities lease.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

      AlphaRx is a development stage company. Certain of the information
contained in this document constitutes "forward-looking statements", including
but not limited to those with respect to the future revenues, our development
strategy, involve known and unknown risks, uncertainties, and other factors
which may cause our actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, among others,
the risks and uncertainties associated with a drug delivery company which has
not commercialized our first product, including


12
<PAGE>

a history of net losses, unproven technology, lack of manufacturing experience,
current and potential competitors with significant technical and marketing
resources, need for future capital and dependence on collaborative partners and
on key personnel. Additionally, we are subject to the risks and uncertainties
associated with all drug delivery companies, including compliance with
government regulations and the possibility of patent infringement litigation, as
well as those factors disclosed in our documents filed from time to time with
the United States Securities and Exchange Commission.


13
<PAGE>

PART II: OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

      None.

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS

      During the three months ended March 31, 2002, we have issued or sold an
      aggregate of 190,000 common shares at $0.15 per share to foreign investors
      for a total amount of $28,500 that were not registered under the
      Securities Act of 1933, as amended and issued 104,600 unregistered and
      restricted shares for services.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

      Not applicable.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      None.

ITEM 5 - OTHER INFORMATION

      None.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

      (a)   EXHIBITS.

            None.

      (b)   REPORTS ON FORM 8-K

            No reports on Form 8-K were filed during the quarter ended
            March 31, 2002.


14
<PAGE>

                                   SIGNATURES:

      Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.


DATED: May 17, 2002


                                  ALPHARx, INC.


                                  By:  /S/ Michael M. Lee
                                      --------------------------
                                      Michael M.  Lee, President


                                  Directors:

                                       /S/ Michael M. Lee
                                      --------------------------
                                      Michael M.  Lee, Director


                                        /S/ Sai Ming Wong
                                      --------------------------
                                      Sai Ming Wong, Director


                                       S/ Joseph Schwartz
                                      --------------------------
                                      Joseph Schwartz, Director


                                       /S/ Sandro Persia
                                      --------------------------
                                       Sandro Persia, Director